Legislature(2003 - 2004)

04/15/2004 08:01 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HCR 26-PFUND: ENCOURAGE INVESTMENTS IN ALASKA                                                                                 
                                                                                                                                
Number 0300                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH  announced that  the last  order of  business was                                                               
HOUSE CONCURRENT  RESOLUTION NO.  26, Relating to  investments in                                                               
Alaska by corporate America in which the permanent fund invests.                                                                
                                                                                                                                
Number 0316                                                                                                                     
                                                                                                                                
REPRESENTATIVE HOLM moved to adopt  the committee substitute (CS)                                                               
for HCR 26, Version 23-LS1469\Q, Cook, 4/8/04, as a work draft.                                                                 
                                                                                                                                
CHAIR WEYHRAUCH objected.   He turned attention to  page 1, lines                                                               
8-10 [in Version Q], which read as follows:                                                                                     
                                                                                                                                
          WHEREAS investments made by the permanent fund in                                                                   
     corporations are of  substantial value, and, therefore,                                                                    
     it  is understood  that corporate  America also  has an                                                                    
     interest in  the economic  well-being of  the permanent                                                                    
     fund; and                                                                                                                  
                                                                                                                                
Number 0365                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON   proffered  that   the  intent   [of  the                                                               
language] is  to leverage companies  that the permanent  fund has                                                               
invested in to make investments in Alaska.                                                                                      
                                                                                                                                
CHAIR   WEYHRAUCH  concurred.      He  stated   that  he   thinks                                                               
corporations  beyond America  have  an interest  in the  economic                                                               
well being of  the permanent fund.  He  suggested that "corporate                                                               
America"  has  somewhat  of  a  pejorative  connotation  in  some                                                               
circles;  therefore, he  would  like to  make  the language  more                                                               
neutral.                                                                                                                        
                                                                                                                                
Number 0535                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH [moved to adopt Amendment 1], as follows:                                                                       
                                                                                                                                
     On page 1, line 9                                                                                                          
                                                                                                                                
     Between "that" and "also"                                                                                                  
     Delete "corporate America"                                                                                                 
     Insert  "corporations  in   which  the  permanent  fund                                                                    
     invests"                                                                                                                   
                                                                                                                                
     Between "also" and "an interest"                                                                                           
     Delete "has"                                                                                                               
     Insert "have"                                                                                                              
                                                                                                                                
CHAIR WEYHRAUCH clarified  that, with Amendment 1,  page 1, lines                                                               
8-10 read as follows:                                                                                                           
                                                                                                                                
          WHEREAS investments made by the permanent fund in                                                                   
     corporations are of  substantial value, and, therefore,                                                                    
     it  is  understood  that   corporations  in  which  the                                                                    
     permanent  fund invests  also have  an interest  in the                                                                    
     economic well-being of the permanent fund; and                                                                             
                                                                                                                                
CHAIR  WEYHRAUCH  announced  that,   there  being  no  objection,                                                               
Amendment 1 was adopted.                                                                                                        
                                                                                                                                
Number 0557                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH directed  the committee's  attention to  page 1,                                                               
line 11, which read as follows:                                                                                                 
                                                                                                                                
     WHEREAS,  because   the  economic  well-being   of  the                                                                  
     permanent  fund  is  inexorably tied  to  the  economic                                                                    
     well-being of  the state as  a whole,  each corporation                                                                    
     that the  fund invests in  has an interest in  a strong                                                                    
     and stable Alaska economy; and                                                                                             
                                                                                                                                
CHAIR  WEYHRAUCH read  a definition  of "inexorable"  as follows:                                                               
"Relentless; not  to be moved  by entreaty."   He said  he thinks                                                               
that  the permanent  fund, through  its prudent  investment rules                                                               
and  various policies,  can  buy and  sell  based on  management,                                                               
without  entreaty, and  "they  can  be moved."    He offered  his                                                               
understanding that the intent of the  language is that there is a                                                               
connection  between the  health  of the  permanent  fund and  the                                                               
health of the state as a whole.                                                                                                 
                                                                                                                                
Number 0642                                                                                                                     
                                                                                                                                
REPRESENTATIVE HOLM suggested deleting "inexorably".                                                                            
                                                                                                                                
CHAIR  WEYHRAUCH stated,  "So,  the conceptual  Amendment [2]  is                                                               
[to]  delete   'inexorably'.    Is   that  all  right   with  the                                                               
committee?"                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH announced that,  hearing no objection, [Amendment                                                               
2] was so ordered.                                                                                                              
                                                                                                                                
Number 0699                                                                                                                     
                                                                                                                                
REPRESENTATIVE KELLY  WOLF, Alaska State Legislature,  as sponsor                                                               
of HCR  26, offered an overview  of the proposed resolution.   He                                                               
noted  that  the  value  of  the permanent  fund  is  nearly  $28                                                               
billion.   There are 2,000  corporate stocks in America  and over                                                               
1,000 corporate  stocks overseas in  which the permanent  fund is                                                               
invested.  He stated that,  as a grant writer and businessperson,                                                               
he  knows that  seeking  funds for  non-profit organizations  and                                                               
encouraging contracts  with businesses is an  ongoing occurrence.                                                               
He indicated  that [HCR 26]  would give  non-profit organizations                                                               
"the  tool  to  go  to  corporate America  and  ask  them  for  a                                                               
contribution."      He  indicated   that   it   would  help   the                                                               
organizations  free  themselves  from  having to  depend  on  the                                                               
government's  handout of  money.   He  also pointed  out that  it                                                               
would mean  less funds that  the state  has to provide  for those                                                               
organizations; therefore,  it would help  the state.   He offered                                                               
examples  of  how the  corporations  that  Alaska supports  could                                                               
support  Alaska   in  return.    The   proposed  legislation,  he                                                               
explained, would show that the legislature supports this.                                                                       
                                                                                                                                
Number 1015                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  directed attention  to page  2, [beginning                                                               
on line 1], which read as follows:                                                                                              
                                                                                                                                
     WHEREAS,  by  adopting  this resolution,  the  member's                                                                  
     [sic]  of   the  legislature  recognize  that   we  are                                                                    
     providing  an opportunity  for  Alaska's nonprofit  and                                                                    
     for  profit  sectors   to  declare  their  independence                                                                    
     through  encouraging  those  sectors to  recognize  the                                                                    
     powerful buying  support the  $24,000,000,000 permanent                                                                    
     fund represents;                                                                                                           
                                                                                                                                
REPRESENTATIVE  SEATON  suggested a  change  in  the language  as                                                               
follows:                                                                                                                        
                                                                                                                                
     WHEREAS,  by adopting  the resolution,  the legislature                                                                  
     encourages  Alaska's nonprofit  and  profit sectors  to                                                                    
     seek financial support from the  companies in which the                                                                    
     permanent fund invests $24 billion                                                                                         
                                                                                                                                
Number 1055                                                                                                                     
                                                                                                                                
REPRESENTATIVE  COGHILL   offered  his  understanding   that  the                                                               
sponsor's  intent  is  to encourage  the  corporations  in  which                                                               
Alaska invests to invest in  [nonprofit organizations] in Alaska,                                                               
rather  than having  the nonprofit  [organizations] seek  out the                                                               
corporations.                                                                                                                   
                                                                                                                                
REPRESENTATIVE WOLF clarified  that the intent is to  get the two                                                               
entities together.                                                                                                              
                                                                                                                                
REPRESENTATIVE SEATON  asked for  clarification of  the permanent                                                               
fund corporation's and legislature's roles in the resolution.                                                                   
                                                                                                                                
Number 1140                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WOLF  said  the  resolution  is  not  asking  the                                                               
permanent  fund dividend  corporation to  "ask corporations  that                                                               
they invest in to do anything."  He continued:                                                                                  
                                                                                                                                
     This is the  sole discretion of the  business sector in                                                                    
     Alaska and the nonprofit sector  in the state of Alaska                                                                    
     to do  this.  We as  the legislature -- there's  a line                                                                    
     here  that we  can't  cross, and  we  wouldn't want  to                                                                    
     cross,  because   then  it  would  become   very,  very                                                                    
     political.                                                                                                                 
                                                                                                                                
REPRESENTATIVE WOLF indicated that  the resolution provides for a                                                               
letter to be given to the permanent fund corporation.                                                                           
                                                                                                                                
Number 1250                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH, in  response to  questions from  Representative                                                               
Seaton,  clarified that  the letter  would  just be  sent to  the                                                               
Board of  Trustees of the  Alaska Permanent Fund  Corporation and                                                               
that  corporation   has  no  duty   to  provide  the   letter  to                                                               
corporations,  but would  make  it "available  to  the public  on                                                               
request".  He  noted that the public could be  broadly defined as                                                               
an individual or a corporate entity.                                                                                            
                                                                                                                                
REPRESENTATIVE WOLF concurred.                                                                                                  
                                                                                                                                
Number 1303                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH suggested  that the  last "WHEREAS"  on page  2,                                                             
lines 1-4 could be changed to read as follows:                                                                                  
                                                                                                                                
     WHEREAS  corporations that  the permanent  fund invests                                                                  
     in have an opportunity  to invest in Alaska's nonprofit                                                                    
     and profit sectors in order  to flourish and grow those                                                                    
     sectors by encouraging the  corporations invested in by                                                                    
     the permanent fund recognize  the powerful buying power                                                                    
     that is represented by the permanent fund.                                                                                 
                                                                                                                                
REPRESENTATIVE  WOLF indicated  that although  the intent  of the                                                               
resolution was simple, what came  back from Legislative Legal and                                                               
Research Services  was a  lot different.   He  suggested deleting                                                               
"by  adopting   this  resolution,  the  member's   [sic]  of  the                                                               
legislature recognize that", thereby abbreviating the language.                                                                 
                                                                                                                                
Number 1452                                                                                                                     
                                                                                                                                
REPRESENTATIVE HOLM referred  to [a one page  handout included in                                                               
the committee  packet] entitled, "Grant  Stocks."  He  asked what                                                               
grant stocks are.                                                                                                               
                                                                                                                                
REPRESENTATIVE  WOLF  explained that  the  list  is comprised  of                                                               
names of corporations in the  U.S. that issue grants to nonprofit                                                               
[organizations]  and  have  a  community  relations  contribution                                                               
program.   He  noted that  the columns  on the  handout show  the                                                               
number of  shares, the  cost at purchase,  and the  market value.                                                               
He added, "And this is as of last year."                                                                                        
                                                                                                                                
Number 1488                                                                                                                     
                                                                                                                                
REPRESENTATIVE  COGHILL  questioned  how  the  legislature  would                                                               
encourage  something  that is  probably  already  happening to  a                                                               
large  degree.   He  said  he is  struggling  not  only with  the                                                               
wording, but  also with the concept,  because many [corporations]                                                               
"may see  this as  an affront,  because some  of them  do heavily                                                               
support many nonprofit  organizations in Alaska."   He noted that                                                               
many corporations  have shown support  of Alaska by coming  up to                                                               
the state  to do business and  have been heavily involved  in the                                                               
communities.  He  offered examples.  He said  he understands that                                                               
"there are companies  that are invested in by  the permanent fund                                                               
who aren't  in Alaska who  may be large organizations  that issue                                                               
grants."  He cautioned against making a negative statement.                                                                     
                                                                                                                                
REPRESENTATIVE  WOLF   related  that,  during  the   last  Alaska                                                               
gubernatorial inauguration,  the Safeway Corporation  presented a                                                               
check to the governor and first  lady for $105,000 for a portable                                                               
mammogram  unit.    Representative  Wolf noted  that  many  large                                                               
corporations  set  aside  budgets   for  community  giving.    He                                                               
indicated  that a  legislator had  given  him the  idea for  this                                                               
resolution six years  ago, and it has taken years  to develop the                                                               
idea  and  explain  it  to  corporate  America.    He  said  many                                                               
nonprofit organizations  struggle to  find funds  every day.   He                                                               
told  the  committee that,  in  2002,  he  came across  a  report                                                               
showing that  over a hundred  million corporate dollars  had gone                                                               
unasked for.   He added  that he cannot substantiate  the report,                                                               
but he said he found it to be "absolutely appalling."                                                                           
                                                                                                                                
Number 1797                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN  suggested adding language to  the resolution                                                               
thanking those  corporations that are  "already doing this."   He                                                               
suggested  that  may remove  some  of  the objections  voiced  by                                                               
Representative Coghill.                                                                                                         
                                                                                                                                
REPRESENTATIVE WOLF said he would have no problem with that.                                                                    
                                                                                                                                
Number 1825                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HOLM  noted  that   when  Fred  Meyer  opened  in                                                               
Fairbanks  in 1984,  222 small  businesses went  out of  business                                                               
over the  next three  years.   He stated, "I  don't have  a great                                                               
desire  to tell  corporate  America how  wonderful they're  doing                                                               
when you can  go into Wall Mart and almost  everything you see is                                                               
from China."  He said, "I  can assure you the percentage of grant                                                               
money given by  the large corporations compared  to a corporation                                                               
my size is absolutely infinitesimally small."                                                                                   
                                                                                                                                
Number 1935                                                                                                                     
                                                                                                                                
BOB BARTHOLOMEW,  Chief Operating Officer, Alaska  Permanent Fund                                                               
Corporation  (APFC),  Department of  Revenue,  in  response to  a                                                               
remark by Chair  Weyhrauch, confirmed that the  current amount of                                                               
the fund, as of yesterday, was $27.9 billion.                                                                                   
                                                                                                                                
Number 1947                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON  asked if the  grant stocks [listed  on the                                                               
previously mentioned  sponsor's handout]  are something  that are                                                               
made available to nonprofit [organizations] in the state.                                                                       
                                                                                                                                
MR. BARTHOLOMEW answered no.   He explained, "We haven't done any                                                               
research as far  as which corporations have a  giving program, so                                                               
I think this was prepared by the sponsor."                                                                                      
                                                                                                                                
Number 1964                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH  stated that he  thinks it's probably  prudent to                                                               
bring another committee substitute  before the committee the next                                                               
time it hears the resolution.                                                                                                   
                                                                                                                                
Number 1982                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON said  he has  a problem  with some  of the                                                               
assumptions that are being made in  the language on page 1, lines                                                               
8-10 [text  provided previously].   He  expressed, "I'm  not sure                                                               
that the corporations that I buy  stocks in really are looking at                                                               
me  as an  investor and  saying that  they're reliant  or they're                                                               
really interested  in my economic  health beyond the  stock value                                                               
that  they're supposed  to maintain  or dividends  that they  may                                                               
provide."  He asked that that  "jump in logic" be considered when                                                               
making a new committee substitute.                                                                                              
                                                                                                                                
Number 2036                                                                                                                     
                                                                                                                                
REPRESENTATIVE HOLM  said there's  a disconnect between  what the                                                               
permanent  fund corporation  managers can  do regarding  how they                                                               
can  affect  the  policies  of  the  corporation  they're  buying                                                               
[stocks from].                                                                                                                  
                                                                                                                                
Number 2051                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH opined  that  the entities  that  have the  most                                                               
significant stake  in the  management of  the permanent  fund and                                                               
how  the  money's invested  are  really  the money  managers,  as                                                               
opposed to the corporations that they invest in.                                                                                
                                                                                                                                
Number 2069                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WOLF   said  he   doesn't  disagree   with  Chair                                                               
Weyhrauch;  however, the  legislature  can't cross  the line  and                                                               
dictate to  the permanent fund  corporation where to invest.   In                                                               
response to  Representative Seaton's  concern, he  listed several                                                               
corporations  and  indicated that  there  is  a connection.    He                                                               
clarified, "If the State of Alaska's in an economic downturn,                                                                   
people don't buy," thus, the corporations do depend on economic                                                                 
well being.                                                                                                                     
                                                                                                                                
[HCR 26 was heard and held.]                                                                                                    

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